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PBS News Hour

News/Business. Gwen Ifill, Judy Woodruff, Jeffrey Brown. (2011) New. (CC) (Stereo)

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U.s. 13, Europe 11, Us 11, Egypt 8, Andy Kohut 6, Catherine Mann 5, Cairo 4, Warner 4, Washington 4, Biden 3, Gwen 3, David Smick 3, Mitch Mcconnell 3, John Barrasso 3, Kate Zernike 3, America 3, Britain 3, Wyoming 3, Gene Sperling 3, United States 3,
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  PBS    PBS News Hour    News/Business. Gwen Ifill, Judy Woodruff,  
   Jeffrey Brown.  (2011) New. (CC) (Stereo)  

    November 30, 2011
    10:00 - 11:00pm PST  

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captioning sponsored by macneil/lehrer productions >> ifill: the federal reserve teamed up with other central banks to ease a growing credit crunch threatening the world's financial system-- a move that prompted global stocks to surge. good evening, i'm gwen ifill. >> brown: and i'm jeffrey brown. on the "newshour" tonight, we assess the coordinated action and where it leaves europe in its continuing debt problems. >> ifill: then, we get two views on the virtues of extending a payroll tax cut set to expire next month from white house advisor gene sperling and republican senator john barrasso of wyoming. >> brown: judy woodruff examines a new poll showing a drop in support for the tea party.
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>> ifill: from egypt, we have the story of hunger, corruption and revolution all making it harder for families to put food on the table. >> in egypt, this price crisis has not come down at all. i mean, for the common family, the prices of food are a daily crisis. >> brown: and margaret warner looks at the impact of the popular cholesterol drug lipitor going generic. >> ifill: that's all ahead on tonight's "newshour." major funding for the pbs newshour has been provided by: >> intelligent computing technology is making its way into everything from cars to retail signs to hospitals; creating new enriching experiences. through intel's philosophy of investing for the future, we're helping to bring these new capabilities to market. we're invesng billions of dollars in r&d around the globe to help create the technologies that we hope will be the heart of tomorrow's innovations. i believe that by investing today in technological advances here at intel, we can make a better tomorrow.
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>> and by the bill and melinda gates foundation. dedicated to the idea that all people deserve the chance to live a healthy productive life. and with the ongoing support of these institutions and foundations. and... this program was made possible by the corporation for public broadcasting. and by contributions to your pbs station from viewers like you. thank you. >> brown: stock markets roared their approval today after the u.s. federal reserve led a global move to head off a new financial panic, originating in europe. the dow jones industrial average gained 490 points to close at 12,045 up more than 4%. the nasdaq rose more than 104
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points to close at 2,620 also a 4% gain. traders responded instantly to word of the new effort to make bank loans easier to come by. the coordinated action was announced in the middle of the european trading day and just before u.s. markets opened and it gave investors a jolt. >> well, we had an old fashioned morning, the kind we used to love to have-- having a good time trying to trade. >> brown: six central banks-- the u.s. federal reserve, the banks of england, canada, japan, switzerland and the european central bank-- announced they would make it cheaper for commercial banks in europe to borrow u.s. dollars. the move was intended to stem a mounting credit crunch in europe, where bank lending is grinding to a halt as the sovereign debt crisis deepens.
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>> ( translated ): this means that the banks are back in business: they can provide loans, they are now liquid again. >> brown: dollars will be loaned or swapped for euros-- by the federal reserve under an existing program that will now be extended into early 2013. in a statement, the fed and other central banks said: for months, the focus of the european crisis has been on countries-- greece, italy, and others-- facing potential huge debt burdens and potential default. those problems continue. but today, at least, investors worldwide, breathed a sigh of relief. we take a closer look now at today's move and the reaction, with catherine mann, professor of economics at the brandeis international business school. she served previously on the federal reserve board of governors. and david smick, a global economic policy strategist and
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author of "the world is curved, hidden dangers of the global economy." catherine mann, i'll stall start with you. what exactly is the problem the central banks were trying to address? >> well what they were trying to address is that it's become more expensive since the summer, actually, for banks to borrow from each other in the overnight market. that's the way thatbacks fund themselves is that they borrow in the overnight market from each other. since the summer, we've been looking at the interest rate they charge each other has been rising and rising and rising. it's now at a level-- or was earlier today-- at the level right before the crisis with lehman brothers. so the central banks were looking at this really expensive cost of banks borrowing from each other as wellly an indicator of the amount of stress that was happening and the lack of trust between banks
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since they weren't going to lend to each other. so that's really what they were trying to address here. it's a narrow bank-to-bank funding question but, of course, from that narrow place you get into a lot of difficulty on lending more broadly to companies and to businesses. >> brown: david smick, the markets... well, they loved it. 490 points. they what did do you see. >> any time a 4% increase in equity market happens it's significant. probably not as significant as we'd like. i agree catherine, this was about trust. and i think it's confusing for a lot of people. what's going on here is that in the sumpter european banks decided they didn't trust each other and the inner bank market froze so the european central bank says we well into the interbank market and so everything worked fine until just the last week or so when suddenly the european bank said "we don't trust the european central bank. we're not sure it's going to be around."
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>> brown: they don't trust each other because they don't know how much of their own problems... >> part of it is, too, there's so much... there's a web of interconnectivity but they don't... but what's interesting now that the global central banks led by the fed said "do you trust us?" and if they don't trust the world central banks collectively we have a problem. but i think it was successful in that what you have right now massive amount of liquidity around the world sitting on the sidelines with very cheap equity markets. so any time there's a little bit of positive news you see this explosion in stock markets because it's so cheap and there's so much money just sitting there ready to move. >> brown: catherine mann, what would you add to about why the markets just took off like that? >> well, the markets are basically run by algorithmic trading these days. nobody's making investments in the stock market thinking they're getting a long-term investment in the company they're buying a stock for. so all we're looking at is
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trading on news. this was big news so when the market openings here in the united states, the market just responded to that news in a very positive way. i think, though, that one of the downsides of this additional liquidity being put into the global marketplace is that it provides more ammunition for the traders in the marketplace who want to get against the central bank or against the european central bank in particular or want to bet against some of those sovereign governments in europe that are running some difficulties. so this excess liquidity or a lot of liquidity does have a down side and i think that we aren't thinking exactly how that ammunition is going to be used. we're thinking it's going to be used for good, there's no guarantee it's going to be used for good. >> pelley: well, this goes to a larger question that we've talked about so many times on the program. today's action, how much does it addressed or not address those
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deeper problems? >> well, it really is a sideshow. if you look at today and you say when's the last time the global central banks got together it was three day that was lehman crisis in 2008. >> brown: that was a big moment. >> and stock market, the dow went up 6%, not 4%. the problem is that for the next three months global stock markets dropped 30% and growth globally including in the u.s. fell off the table. the problem is this is a solvency problem in europe, not a liquidity problem. you have a $5 trillion euro solvency problem that has to be financed by at least it looks like 6%, sometimes 7% or higher and that will put enormous strain on the europeans. so i'd look at it and say they haven't really solved the problem of solvency. they've got this nice little takeoff. it's a reprieve but we're back to square one in dealing with
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the problem. the other thing i would say is i think that the people who are selling and have been in the last few weeks are not traders in new york, hedge funds, speculators. they're barred from doing it. the people who are selling european sovereign debt right now the europeans. the european banks are selling themselves because they're saying we don't have confidence in our leadership. >> brown: catherine mann, what about the american risk here? i mean, it was enough to get the federal reserve involved, right? >> well, i think fact that this was a coordinated effort is important because it does take the spotlight off of any individual nation state or individuals' national financial institutions that, oh, we're going to try to help them in particular. but it is a fact that the foreign branches of... or the u.s. branches of foreign banks... in other words, european bank, they have a branch in new york. they are ones who are... were
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particularly tight in being able to get funding because the u.s. banks that were sitting around them in new york were closest to the accident waiting to happen and so they were the ones that were most restrictive in their willingness to tlond those u.s. branches of foreign banks. but i do want to go back to the issue of whether or not this is just a band-aid and is not addressing the underlying problem in europe. it's very similar to the type of intervention that the central banks did before lehman and then of course, we have additional problems after that. the central bank intervention, that was coordinated at the time didn't solve the underlying problems of the housing market. similarly, this intervention is n europe is not going to solve, doesn't even come close to addressing the political problem that they face there that it's a fiscal problem, national
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governments have spent too much money, they have borrowed too much over a long period of time and for greece in particular there has to be some write down of those debt obligations, the so-called hair cuts. >> brown: very briefly >>. it's a little bit like the house is on fire but also the pluming is backed up. well, today we took care of the plumbing but the house is still on fire. >> brown: markets were happy with better plumbing and we'll continue to watch the house-- i hope not burn down. catherine mann and david smick, thank you both very much. >> you're welcome. >> ifill: still to come on the "newshour": extending the payroll tax; declining support for the tea party; rising food prices in egypt and ending patent protection for a popular drug. but first, with the other news of the day. here's kwame holman. >> holman: public sector employees in britain today staged their largest national strike in decades-- protesting pension curbs. they walked off the job in hospitals, schools and elsewhere
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although airports were less affected. we have a report from gary gibbon of independent television news. >> reporter: on the march, tens of thousands of public sector workers. >> the biggest demonstration of determination and defiance this country has witnessed for almost a century. it looks like something of a damp squid. >> reporter: it didn't bring the country to a standstill, but around 60% of state schools in england were shut. in scotland, nearly all schools closed. labour members of the scottish parliament came out to support the strike. in cardiff, bus services were canceled. most schools closed. libraries and rubbish collection were affected. in birmingham, thousands of public sector workers marched. ambulance services were cut back to emergency only. the government claimed less than a third of civil servants went on strike but some of them were quite senior and included david cameron's number ten press
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offices, the one who normally answers questions about strikes. the travelers around the board is faster moving than normal thanks in part to a mass callup of volunteers to stand in for striking immigration officers. >> the purpose of today is not to bring britain to a halt, it's to show the strech of feeling of millions of public sector workers. >> reporter: they've already discussed future strikes next year which may take a different form, more targeted action aimed at disrupting key services. >> you heard the chancellor yesterday. do you think he's going to dig into his pocket and get out more money? >> i hope so but... >> reporter: hand on heart, what do you any? >> i doubt it. but we can keep fighting and we will. >> reporter: sources say it hopes it can peel away some unions from others when negotiations restart. neither government disputed the unions' claim that two million went on strike today saying the real figure was much lower. >> holman: the conservative-led government also has announced new limits on public sector pay
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and plans for cutting thousands of additional jobs. britain retaliated today for tuesday's attack on its embassy in iran. all iranian diplomats were ordered to leave itain within 48 hours. and all british diplomats in iran were withdrawn. the twin actions came after mobs stormed the embassy compound in tehran. they set fire to union jack flags and tossed documents through windows. police in los angeles and philadelphia cleared anti-wall street encampments today. they arrested scores of people, but there was no violence. close to 1,400 police officers-- some in riot gear-- descended on the occupy los angeles camp site outside city hall just after midnight. they dismantled nearly 500 tents, still there two days after a city deadline to clear the area. >> the whole world is watching! >> holman: more than 200 people were arrested for defying the order to leave, including several who'd taken refuge in makeshift tree houses. mayor antonio villaraigosa had praise for both sides.
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>> it was conducted in a there were no major injuries to police or protestors. the activists' fundamental rights were respected, the result was a peaceful and orderly conclusion to encampment at city hall. this was truly an exemplary operation. >> occupy philly! >> holman: a similar scene had played out hours earlier in philadelphia. 52 were arrested there, but again, the operation was performed largely without incident. republican presidential candidate herman cain gave no indication today that he's about to drop out of the race. on tuesday, he'd said he was reassessing his campaign, after a georgia woman claimed they had a 13-year extra-marital affair. other women have accused cain of sexual harassment. today, in ohio, the candidate said he's getting a groundswell of positive support. >> they're attacking my character, my reputation and my name in order to try and bring me down.
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but you see, i don't believe that america is going to let that happen. >> holman: cain has denied all of the allegations. in the elections in egypt, the muslim brotherhood took an early lead in the first phase of voting for the powerful lower house of parliament. the islamist group had been banned for years under president hosni mubarak, who was ousted in february. the voting for the "people's assembly" will continue in stages through mid-january. vice president biden today painted the u.s. pull-out from iraq as a new beginning that will benefit both countries. the vice president was in baghdad, ahead of the final u.s. troop withdrawal at year's end. his visit also brought out shi-ite protesters, chanting "no to america" and "get out biden." meanwhile, secretary of state hillary clinton arrived in myanmar, and said she hopes the new government pursues more reforms, after decades of military rule.
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she's the first u.s. secretary of state to visit there in more than 50 years. those are some of the day's major stories. now, back to gwen. >> ifill: the president wants to extend a payroll tax cut. many republicans do too. but both sides are far apart on how, exactly, to get that done. it was no accident today that president obama took his campaign to get congress to extend a payroll tax cut to the must-win state of pennsylvania and to vice president biden's home town of scranton. >> we're fighting to rebuild an don't vote to raise taxes on working americans during the holidays. put money back into the pockets of working americans! do your jobs! pass this bill. >> ifill: the tax cut passed last december dropped the rate
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two points, to 4.2%. the white house estimates that reduction saved a typical family about $1,000. now, the president wants to slice the rate again, to just over 3%, for an average savings of $1,500. democrats would pay the $265 billion cost by imposing a permanent surtax on the wealthy- - those earning $1 million a year. republicans like senate minority leader mitch mcconnell argue that taxing the wealthy penalizes the people who create jobs. >> it's about whether we should help those who are struggling in bad economy by punishing the private sector businesses that the american people are counting on to help turn this economy around. >> ifill: but senate majority leader harry reid says republicans are balking because they favor the rich. >> every american family will have a $1,000 less to spend on food and clothing and diapers next year except about 350,000 people. and so republicans can continue
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to try and protect people who earn an average of $3 million a piece. >> ifill: but both sides appear to be edging toward some middle ground. house speaker john boehner today: >> democrats have called for them to be paid for, and so if in fact we can find common ground on these extensions i think you can take to the bank that they will be paid for. >> ifill: the president has also said any new spending should be paid for, but white house officials have stopped short of saying he would veto legislation that does not meet that test. we get the administration's take first, with white house national economic council director gene sperling. i spoke with him a short time ago. gene sperling, welcome. >> thank you. >> ifill: finally we seem to have an area of agreement between republicans and democrats that there is a need to extend the payroll tax cut. so why isn't it a slam dunk at this point?
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>> well, we hope it will be and what the president is calling for is not only extending the tax relief we gave last year but expanding it to cut payroll taxes up to $1,500 for typical families and cutting in half the payroll tax cuts of evey small business in the united states. we think this is obviously going to be helpful for families struggling with higher gas and food prices but more importantly it's what we need for the economy. private sector economists estimate that this payroll tax cut... the full payroll tax cut the president is proposing would mean up to 600,000 to a million more jobs with the type of unemployment we have and long-term unemployment, that type of job creation would not be more important at this point. >> ifill: here's the sticking point: you don't agree on exactly how to pay for this. senator mitch mcconnell put out a statement about the republicans' proposal about how tooff set this. he suggests freezing federal
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civilian salaries, laying off federal workers, means testing government health benefits, unemployment and food stamps. is that something the president can accept? >> well this is a bill right now that the senate will be voting on that the president very much supports. it would pay for this tax relief for every small business and worker in a way we think is very fair and fiscally responsible. only 300,000 americans we'll ask to pay a little more, about 3% more a year in the next coming years so we can give this type of tax relief and not have the deficit go up by a single penny. we really think that is a very strong fair proposal that will is supported by democrats, republicans and independents back home whether or not it's supported in congress and we'd still like to see... we still believe that can and will pass and i think it's a very hard thing for all republicans to vote against in light of what it would doll for small businesses and workers.
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>> ifill: a lot of republicans are saying that's a non-starter. that, in fact, you're taxing the job creators by doing this. are you just rejecting out of hand senator mcconnell's counterproposal? >> well, two points. one, we're giving tax relief to over 99% of small businesses and entrepreneurs next year by cutting the payroll tax cut in half to have a taxncrease that affects only the 300,000 most well off americans. so this is a very significant tax cut for small business job creators, entrepreneurs. and as to the... mitch mcconnell's proposal, i really haven't seen the details and to be honest, gwen, it does get a little confusing for us because first republicans came in and told us that they didn't think tax cuts should be paid for at all and made a big point of that now they are... when we're trying to give tax relief, they're insisting that it must be. and so i don't know what they're... what exact t exact pay-fors are. but if he want f they want a bill that's fully paid for
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that's fair the easiest thing to do is simply vote for the proposal that majority leader harry reid has put out that president obama supports which would cut payroll taxes for every worker, every small business and ask for a very small extra bit of taxes from the 300,000 americans who make over a million dollars a year. >> ifill: how do you know even if you got everything you wanted that this would even work. the joint committee on taxation says people will take this money and spend it, that it will hurt businesses, other people say they will spend it on paying down debt rather than stimulating the economy. how do you know this is a solution rather than broad-brush tax reform. >> reporter: we know because if you look at private sector experts, macroeconomic advisors, moodys, the congressional budget office, all of them recognize that this type of payroll tax relief is estimated to have a very significant impact on the economy, most experts
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independent of this administration say this would mean over a half percent growth. several had said this would mean up to 600,000 to a million jobs. it just makes sense. when families are pressed with higher gas prices, higher food prices, when they may have a member in their family who's not working they're going to pull back on their spending. an extra $1,500 in their pockets mean there's going to be more customers and more small businesses and that's going to give them more ability to hire, give raises and do things that will help the economy gain momentum. >> ifill: national economic council director gene sperling, thank you for your time. >> thank you, gwen. >> ifill: immediately after that conversation i turned to wyoming senator john barrasso vice chairman of the senate republican conference. senator barrasso, thank you for joining us. >> thank you, gwen. >> ifill: we just heard gene sperling say... presshe president's case for the tax on the wealthy as a way of paying for the payroll tax and we see senator mcconnell has a different proposal. which do you think is the better approach? >> well, i think the american
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people realize that the problem with this government is that we spend too much. they don't think we're taxed too little, it's that we spend too much and i agree with the president that we do need to extend these tax breaks for people all across this country who are stuck living under the obama with 9% unemployment in this country. and we need to extend that and allow those people to have an opportunity to have more of their hard earned money in their own pockets but i think it should be paid for. i don't think you should just add it to the debt, and the white house hasn't yet said no, no, we won't do that. and i don't think you should raise taxes on anyone during these economic times. if you go to what bowles and simpson mentioned as ways to cut back on the size of government and do a hiring freeze as well as a pay freeze, that's clearly the way i would see we should pay for this. many families across the country are living at 2007/2008 income levels.
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i think it's reasonable to have federal government employees living that way as well. >> ifill: what about means testing government health benefits, unemployment compensation and food stamps. are you hitting the people who will be hurt the most? >> well, we heard from senator coburn here today that there are people actually on unemployment who make huge amounts of money as well as those on... when food stamps. and we want to see exactly what the language is there. but i think fundamentally we need to get the economy going again. gene sperling today had an editorial in the "u.s.a. today" where he blamed the poor economy on the tsunami in japan, on high gasoline prices and on what's happening in europe. and this administration with its policies have made it harder and more expensive for those seeking to create more american jobs and more american energy to do just that. so it's the policies of this administration that are have made matters worse. >> ifill: republicans have supported this payroll tax holiday idea before, most recently last year when this one
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was passed. what's different this time? >> well, i support it again this time, i just want to have it paid for. i don't want to add it to the debt. i don't want to have it added to the deficit. and i don't think we should raise taxes on anyone in economic times like these. so i do support this. i agree with the president. but i think we should do it by cutting spending. our problem in this country that we spend too much. and until we get the spending under control, we're going to have continued problems. the american people know this. we're spending now 25% of our gross domestic product on government and we need to get that more at a traditional level of about 20%. >> ifill: some of your colleagues, including senators demint and snowe have said that we should be overhauling the entire tax code. this that this piecemeal approach is never going to get to the bottom of the problems you're discussing. do you agree with them or think that's too much to hope for right now? >> i agree we need overall tax reform in this country. we need to eliminate these lobbyist loopholes but it's overall tax reform that i think is needed in this country so we
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have a fairer simpler tax system that people can understand without these loopholes that continue to be out there which i think are not fair and make it much, much harder for the average american. >> it's clear that the white house or the democrat in the senate and the republicans? the senate do not agree on how to pay for something like this even though you agree it's a good idea in theory. is there any chance that you'll be able to meet the deadline? you have a test vote tomorrow night. that you'll meet the deadline at the end of the year in order to prevent an automatic tax cut from taking effect. >> well, i believe we are going to work... >> ifill: sorry, i meant tax hike. >> i believe we're going to work together to find a solution that works for all americans so that we don't have to raise taxes on anyone and can just cut spending in a great place to start is with the hiring freeze with the federal government and as well as a salary freeze there the federal government. that's a good place to start. >> ifill: what do you base your
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optimism on that you'll find middle ground with one side saying we want to tax the rich and the other side saying we want to freeze federal government. >> we both want to get to the same conclusion and same outcome which is to make sure that the american people do not see a change this year in terms of the tax benefits that they had last year. we need to keep that money in the hands and pockets of the american people. we get to that end in the best way to do it is by cutting spending not by raising taxes on anyone. >> ifill: senator john barrasso, republican senator of wyoming, thank you very much. >> thank you, gwen. >> brown: next, the tea party burst on the scene as a new political force. but does it have staying power? judy woodruff has our look. >> woodruff: a fresh survey released yesterday by the pew research center found that support for the tea party had decreased over the past year. the decline was seen nationally, but also in districts represented by members of the house tea party caucus.
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the pew poll found that 27% of americans now disagree with the movement, while 20% support it. in tea party represented districts, 25% of respondents said they backed the movement, while 23% were against it. to help us sort through the numbers and what they mean for the movement's influence, we are joined by andy kohut, president of the pew research center and kate zernike, national correspondent for the "new york times," and author of "boiling mad: inside tea party america." thank you both for being here. andy kohut, let me start with you. we just heard what these numbers say about what support for the tea party is like right now. what did it look like a year ago around the time of the midterms? >> at the time of the midterm wes had a pleuralty of americans saying they agreed with the idea of the tea party. keep in mind, most people... only about half of the people have an opinion, but among the people who do have an opinion, a pleuralty said "we agree with them."
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at the beginning of of the year when we asked people "what affect do you think the tea party will have on congress?" most people who had an opinion said "it's going to be a good effect." by august we had 29% to 22% pleuralty saying "by the way, they're having a bad effect." so we've seen a deterioration of the view that they're a positive force here in washington and we've seen fewer people agreeing with them both as you pointed out in the country... nationwide and also in the 60 districts where members of the tea party caucus come from. >> woodruff: andy kohut, you look at the numbers all the time. is this a significant drop? >> it is pretty significant given how influential they've been and how intense the views have been about the issues they take on. and what adds the significance to it is we see the same trend with respect to the republican party. it's not just the tea party.
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throughout much of this year, the early part of the year, even numbers of people have a favorable and unfavorable view of the raeb party. just as they have of the democratic party. by october of this year, we have a 36% to 55% margin saying i have an unfavorable view of the republican party. >> ifill: and by point of contrast, what about for the democrats? >> democrats it's 46-45. knew's nothing to crow about, but it's a lot better than 36-55 and there's some reasons. you dig deep interthe trend, there's some reasons for this. >> ifill: just quickly on the tea party, andy kohut. just based on what you can see, can you tell why this has happened? >> well, i think there's no direct reason but a couple things come to mind. one, there's a great deal of volatility about politics in this era when there's so little... when you have 10% rating the congress favorably and 85% saying they're
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frustrated with government and so there's that. also i think may be a performance issue. especially in these districts i think many people expected the tea party would have a positive effect and as we see with the republican party, they may be blaming the tea party for gridlock. >> woodruff: kate zernike, you've studied the tea party. you've looked at the numbers. what do you make of them? >> i think as andy mentioned, so many people supported the tea party-- four in ten voters-- told exit polls they supported the tea party but most people didn't know what the tea party was about. they've now had some time to see what tea party lawmakers look like, to see what kind of policies they're proposing and i think they're finding that, in fact, it's no better than what they had when democrats were in charge of the house. i think in particular when you look at the reasons why, one reason people gravitated toward the tea party was they were upset with the health care legislation of 2010 and how that had been negotiated. they felt like it was washington
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at its worst. and i think now they look at the debt ceiling agreement and the debt reduction commission and think that this, too, is washington at its worst. but when health care was being debated it was the democrats in charge, now it's the republicans so the g.o.p. is taking some of the blame. >> ifill: but the tea party has remained as active or not in these... in these districts and in the media. >> well, i think certainly tea party has remained active. but i think there's more of a split now between tea party activists at home and tea party lawmakers in washington and i think their goals often don't merge. when you look at earlier polls, poll wes did at the time in july during the debt ceiling debate, tea pay supporters wanted republicans and democrats to find some compromise and they thought the debt ceiling agreement should include both tax increases and cuts in spending whereas tea party lawmakers were saying we're not going to compromise and do anything like raise taxes, we're not even going to close tax loopholes because that might be
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seen as a tax increase. it's got to be done purely through cutting spending. so there was a diverge glens what people voting for tea party lawmakers wanted and what tea party lawmakers were trying to do. >> woodruff: i should mention we at the newshour talked with amy cramer at the tea party express-- one of the leaders of the movement-- among other thing she is said "part of this the due to the news media mischaracterizing what the tea party's all about. >> well, i think... i would obviously disagree with that. i think the media has give an lot of coverage to the tea party and a lot of it's been pretty fair. i think more likely what's happening is people have a sense of what the tea party really is. we see the same thing with occupy wall street. people say what does this stand? what is it going to do? with the tea party supreme had a chance to see what the tea party looks like, what a tea party legislator is going to do once he or she gets to coress. what kind of policies they're going to propose, what what it would mean for voters back home. that's what they're reacting to. >> woodruff: i want to ask both of you what you think this could mean for the elections of next
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year, president, and congressional? andy, what do you see? >> well, if the republican party continues to have a less favorable image, it's seen as a party associated with extreme positions and off very conservative candidate it might hurt the very conservative candidate. the other thing it could conceivably do if there's a republican victor and the republican party and tea party don't recover, down the ticket republicans might do less well with regard to congress than they might have if the republican party and the tea party had stronger images. there's one thing i'd like that add... well, go ahead. >> woodruff: i wanted kate's input on that question if we could. kate, looking at next year, what do you think this could portend? >> i think it depends. if the nominee is mitt romney, he's not someone associated very strongly with the tea party so i don't tnk he will carry the tea party baggage into the election. if it's rick perry or michele bachmann there's much more...
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they're much more associated with tea party views. you know, i tend to think that each party gets about two years. the democrats had 2006 and 2008 and the republicans will probably have 2010 and 2012 in congressional elections but that's just a guess. i still think the economy is the major point for the campaign next year. >> woodruff: all right, we will leave it there. andy kohut, we'll let you finish that thought the next time you are with us. andy kohut, kate zernike, thank you. >> ifill: we turn now to egypt and a report on how rising food prices helped fuel the revolution that led to this week's parliamentary elections. this story marks the launch of a new series: "food for 9 billion," a year-long project of the center for investigative reporting, homelands productions, pbs "newshour" and "marketplace." the reporter is sandy tolan of homelands productions. >> reporter: this little market in an upscale cairo neighborhood caters to the servant class with
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simple, low-end produce; it's what qotb and sabah orany saber can afford. >> ( translated ): we used to eat off of our land. but here and now everything is expensive. >> reporter: since 2007, global food shortages have created huge price spikes. the cost of tomatoes, cooking oil and lentils skyrocketed and helped fuel the revolution that toppled hosni mubarak. >> ( translated ): the revolution started because of the price increase. in the old days nothing like this happened. whether it was meat, chicken or vegetables, food was not this expensive. >> reporter: qotb works at this villa as a night watchman and chauffeur. his family lives in the front room. they're not going hungry. but like 40% of egyptians who live on $2 a day or less, the family struggles to put food on the table. they spend about $25 a week on food; that's more than half the family income. >> ( translated ): we are unable to save money, so until god makes it easier, we are just
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taking it step by step. >> reporter: qotb didn't take part in the revolution. he didn't have time. the closest he got to tahrir square was when he dropped off his boss there-- she's a journalist for al jazeera. he hopes the new government will help him educate his children, since the family has no savings. >> in egypt this price crisis has not come down for the common family, the prices of food are a daily crisis. >> reporter: during the revolution, egyptian filmmaker and activist philip rizk spent every day at tahrir square. >> most people can't even afford protesting any more. because they're not formally employed, which means you have to scrounge for work day in and day out. >> reporter: for millenia, it wasn't like that. the fertile silt of the nile made egypt a nation of farmers, producing daily bread for all the people. the nation had a secure food supply, created at home. now, with 85 million people, egypt is the world's biggest
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importer of wheat. much of it comes from the u.s. and russia. government support for small farms dwindled under the mubarak regime, and with strong encouragement from u.s. a.i.d a major shift took place. a new policy arrived: growing high value cash crops, for export. >> we were the first company to go and farm potatoes in the middle of the desert out of nowhere. people thought that we were lunatics. >> reporter: in the late 1980s, when mubarak enticed egyptian capitalists with incentives to green up desert lands, entrepreneur tarek tawfik, among the first to answer the call. >> i went to look at the land where the factory would be built and it was just pure desert. it was depressing, i said, "for heaven's sake, this is where i'm going to be working." >> reporter: tawfik is part of a new class of mba managers bringing foreign investment, a lot of it from the gulf, to egypt's new export ag sector. >> and then in no time there was this factory built up, farms set up, three or four other
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factories mushroomed out of this factory. >> reporter: today the desert road between cairo and alexandria is lined with factory farms to produce luxury produce for the european table. like these strawberries at americana farms. factories like this take fruits vegetables and fruits and add value. produce is delivered from the nearby farms, graded by size and inspeed to meet international quality standards, then passed through industrial-sized freezers to extend shelf life before they're sealed into plastic bags for shipment abroad. >> this is a big opportunity for us to export things, a product to europe or the united states. >> reporter: but it wasn't patriotism that got so many investors to build farm factories out in the desert. it was cheap land, cheap water, and cheap power, all financed through cheap credit to those with the right connections. economist magda qandil says there's a name for this practice. >> crony capitalism. basically, you have an
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entrepreneur who is well connected to people with high authority, and through this connection they are able to seize a lot of benefits in the form of land allocation, in the form of access to cheap credit, you end up milking a lot of benefits for yourself. >> reporter: and small farmers? many ended up here, in cairo. an estimated four million left the farm over the last 20 years, in part because of laws that increased rents to family farmers by as much as 600%. small farmers flooded the cities looking for menial work. qotb, the cairo chauffeur and security guard, was one of them. >> ( translated ): life was getting harder on me and my father, income was getting limited so i came to cairo. i left so much behind, i left my heritage and land of origin, but in the end, that's life. >> reporter: when he can, qotb
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travels back to his family home in al-faum, to bring some cash to his father, who still works the parched land. >> ( translated ): i wish i could be with my father on the farm land. but we are a big family, and the land could not support all of us. >> reporter: qotb's father was given these two acres in the early 1950s, under a land reform program of president gamal abdel nasser. it was a cherished gift for a poor family. but under mubarak, families here say, water was steadily diverted toward crony projects. and now qotb's father gets only a slow trickle, once a week. in fact, the government stole the water from the people, say local farmers including this neighbor of qotb, hussein, who took me on his scooter to show how the water was diverted from the main canal chinatown style,
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to help a rich man's desert bloom. >> ( translated ): this is our main source of water, that what used to cultivate all our old land from before. >> reporter: it was here, hussein says, at this irrigation diversion gate, that farmers fought with local police over which direction the water would flow. at one point, he says, gun battles broke out. >> ( translated ): look here, right here in front of you. it was given to the cronies, to the families, to the well- connected people. this is why there was a revolution. >> reporter: hussein tells us a story over tea: when mubarak fell, he was on his way to tahrir square-- part of this team of local farmers fighting the corruption they say was forcing them from their land. hussein says 80% of his generation has already left the land. they no longer enjoy meals from food grown at home. landless peasants increasingly depend on imports. some see it as a national
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security issue. >> you cannot guarantee the price of the international market, you cannot guarantee the ability that one day every person will keep his wheat to himself. it could happen. >> reporter: mamdou hamza was one of mubarak's strongest critics. he's a well connected civil engineer with his hands in many national projects. he watched over many young people during the dramatic days last february at tahrir square. he says for a stable egypt, new leaders need to focus on growing more food at home. otherwise, he says, the country could be vulnerable to future price spikes. >> we must have at least 80% strategically produced in this country. last year russia said i'm not going to export wheat. people could use it strategically against us to push us to do things we should not, would not otherwise like to do. >> reporter: hamza says this means more efficient use of irrigation, farmer cooperatives on larger plots, and preventing developers from gobbling up the 5% of egypt's land that is
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suitable for farming land. hamza quotes an old egyptian proverb that speaks to the wisdom of growing your own food on your own land. >> ( translated ): if you don't eat with your hand in the farm to produce your food, you will not be able to think with your own brain, somebody will think for you. who, who will feed you? >> reporter: as for qotb, and his wife, they no longer eat by their own hand. a laborer of the landless class, qotb still dreams of going back to al fayoum. >> ( translated ): we could have worked together as one big family instead of being divided. i dream about it all the time, but i don't have the money to support that dream, or to go back home. >> reporter: now the family is part of an urban force, demanding lower food prices, and access to education, ashe price for peace under a new regime.
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>> i hope the children will do great things. maybe my daughter can be president! she's getting her education and i'll support her all the way. till my last breath. >> reporter: yesterday, with his children in mind, qotb voted in a free election for the first time. >> ifill: qotb lives in giza, which votes next month. elections and runoffs for both houses of parliament continue until march. >> brown: finally tonight, a blockbuster drug goes generic and patients, doctors and the pharmaceutical industry all have an interest. margaret warner has the story. >> warner: it's been the most profitable prescription drug in history, with many millions taking it over the last 14 years. but today lipitor-- a so-called statin that lowers cholesterol levels-- lost its patent protection, opening the door to low-cost generics. lipitor accounted for nearly one
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with more than $10 billion in worldwide sales last year, and more than $130 billion over the patent's life. it's the first of several "blockbuster drugs" due to lose their patents in the next year. we look at the implications of all this with doctor jerry avorn, a professor at harvard medical school and a senior physician at brigham and women's hospital in boston. dr. avorn, thank you so much for being with us. how big a change is this for the world of pharmaceuticals and for consumers to have lipitor going off patent today? >> well, for consumers, it's welcome news for those who are on lipitor because they'll be able to switch to the generic drug which is the exact same molecule and will work every bit as well and it will cost a fraction of what they've been paying thus far. >> warner: how small a fraction?
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>> lipitor is selling for about $5 a pill. it probably costs about a dime a pill to make. so it's a nice business to be in with that kind of a markup. and probably the rte will drop down to maybe about half as much initially and then even lower than that. there are statins that are now available at discount stores for there are 4 a month as opposed to $5 a bill. so it could well get down into that there are 4 to $10 a month category. certainly after six months when there will be many more generic manufacturers selling it. >> warner: now pfizer, though, is fighting back against generic competitors. >> yes, they are. it's kind of like trying to hold back the tide because in six months because of a variety of legal reasons there will be many generic manufacturers and at that point pfizer can't keep fighting them all back. i think what it's trying to do is just preserve whatever franchise it can in the waning months of its availability on the market and, frankly, i'd
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rather that all of that enormous creativity they're showing in ways of dealing with this legally and through deals and economically were being spent on developing new products rather than figure out ways to get people not to use the generic. >> warner: explain what they're trying to do. it's quite a novel approach. >> it involves arranging deals with prescription benefit management companies to not make the generic available. it involves making coupons available to patients to bring down the co-pay to get them to stay on lipitor as opposed to the generic. it involves a variety of side deals with insurers, with druggists, anybody who's a player to desperately hang on to a couple more months of libtor use. >> now, if they're not... is there not about a debate as whether generics are as good or as reliably good as the brand name manufacturer or do you consider that a settled point?
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>> it should not have been a debate for decades. generics are every bit as good as the brand name drugs. there's a lot of disinformation that gets spewed out there. it's not scientifically accurate information. all the data we have is that generics are every bit as good as the brand name products. they're hold the same high standards by f.d.a. they contain the exact same moll yules in the exact same strains and i wish that old canard about generics not working as well could be put to bed because it hasn't been true and it isn't true. >> warner: as i said in the introduction, there are other blockbuster drugs like lipitor, for instance plavix, the blood thinner, that have been a hefty chunk of the sales of the company, of the manufacturer. are there other such drugs in... either on the market or in the pipeline or are we seeing a turning point in the industry? >> well, there are people who have said the era of the blockbuster drug is over and when i of blockbusters like vioxx or aand have yashgs both of which cause heart attacks,
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maybe those blockbuster wes won't miss so much. but there could be new blockbusters coming along. there's a variety of new drugs for treating anti-coagulants or blood thinners for treating a condition called it a reel fibrillation that are coming to market. some could be blockbuster. if by that i mean billion dollar a year drugs but we may see fewer of them than we have in the past because people are looking much more carefully about how we spend every health care dollar and a lock of the bomb busters of recent years probably if think had been subjected to the scrutiny that drugs are going to get from hoo here on out-- i'm thinking of avandia and vioxx-- may never have been blockbusters in the period we're living in in the first place. >> warner: is it also the case that the blockbuster drugs, as we call them, apply to such a huge class of people and now the whole nature of the research and the formulas for various drugs has become more refined? more targeted? >> well, i wouldn't dismiss the possibility that there is going to be some wonderful new drug that we can't even imagine.
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i think nobody saw google or facebook coming a few years before they hit the streets and they were in a sense blockbuster of their own. i wouldn't rule out the possibility of exciting drugs for numbers of people coming down the road. it's just hard to know what they might be sitting here in 2011. >> warner: dr. jerry avorn in harvard medical school, thank you so much. >> you're very welcome. >> ifill: again, the major developments of the day: the federal reserve teamed up with other central banks to pump more dollars into the world financial system and ease a growing credit crunch. stocks rocketed higher on the news. the dow jones industrials was up 490 points, a gain of more than 4%. and hundreds of thousands of public sector workers staged a day-long strike in britain against pension reforms. online, we have the story of microscopic worms sent into
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space. kwame holman explains. kwame? >> holman: scientists are using the invertebrate astronauts to study the long-term effects of zero gravity and radiation exposure. that's on our science page. patchwork nation explores how americans, especially suburban investors, might vote next year if europe's debt crisis drives down the markets. and a group of actors visits occupy d.c. sites to support workers' rights. find an interactive multimedia tour on paul solman's making sense page. all that and more is on our web site: newshour.pbs.org. gwen? >> ifill: and that's the "newshour" for tonight. on thursday, we'll consider the risks and effectiveness of airport security body scanners. plus we talk to retiring massachusetts democrat barney frank. i'm gwen ifill >> brown: and i'm jeffrey brown. we'll see you online and again here tomorrow evening. thank you and good night. major funding for the pbs newshour has been provided by:
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and by the alfred p. sloan foundation. supporting science, technology, and improved economic performance and financial literacy in the 21st century. and with the ongoing support of these institutions and foundations. and... this program was made possible by the corporation for public broadcasting. and by contributions to your pbs station from viewers like you. thank you. captioning sponsored by macneil/lehrer productions captioned by media access group at wgbh access.wgbh.org
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